[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-113259-en":3,"doc-seo-113259-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},113259,2336464648322,"Aria","https://ap-avatar.wpscdn.com/avatar/2200025388227c56fec?_k=1778556882303663488",8,"Research & Report","Unfolding Trade Effect in Two Margins of Informality - The Peruvian Case","This paper studies how increased import competition affects informality through two distinct margins in Peru. It distinguishes the extensive margin, where workers are hired by unregistered employers, from the intensive margin, where registered firms employ workers off the books. Using a rich household survey, the analysis finds two opposing mechanisms: declining extensive informality as unregistered firms shrink, and rising intensive informality as registered firms reduce costs by hiring informal workers. Overall results indicate the intensive margin drives the total impact, implying trade liberalization increases informality.","Pub lic Disclosure Authorized Pub lic Disclosure Authorized  \nThe World Bank Economic Review, 36(1), 2022, 141–170  \n[https://doi.org10.1093/wber/lhab023](https://doi.org10.1093/wber/lhab023)  \nArticle  \nUnfolding Trade Effect in Two Margins of Informality. The Peruvian Case  \nCamila Cisneros-Acevedo  \nAbstract  \nThis paper studies the effect of an increase in import competition on informality along two margins. It considers the extensive margin, where workers are hired by unregistered employers, and the intensive margin, where even though jobs are carried out by registered firms, employees are off the books. Peru’s relentless informal employment and its unprecedented trade-driven growth provides an ideal case study. Using a rich household survey, this study finds that exposure to trade impacts on informality through two competing and contrasting mechanisms. On the one hand, extensive-informal employment declines as unregistered employers shrink or exit due to their low productivity. On the other hand, intensive-informal employment rises as registered employers reduce costs by hiring informal workers. Furthermore, results suggest that the intensive margin drives the overall effect. Hence, trade liberalization increases informality.  \nJEL classification: F16, F14, F66, J46  \nKeywords: international trade, globalization, informal labor market, Peru  \n1. Introduction  \nThe International Labour Organization (ILO) defines informality as the sum of employment in unregistered firms and the portion of employment in registered firms that does not comply with labor legislation.1 ,2 In this way, the ILO acknowledges the existence of two types of informal workers. Surprisingly, this distinction has been mostly overlooked in the literature. This paper studies the effect of trade liberalization on informal labor by distinguishing two crucial margins of informality. Following Ponczek and Ulyssea (2021), the extensive margin refers to workers hired by firms that are not legally registered  \nCamila Cisneros-Acevedo is Assistant Professor at the University of Tübingen, Tübingen, Germany; her email address is[camila.cisneros-acevedo@uni-tuebingen.de. The](camila.cisneros-acevedo@uni-tuebingen.de. The) author thanks Alejandro Riaño and Facundo Albornoz for their invaluable guidance. She also thanks seminar participants at the CSAE PhD conference (Oxford), The Shadow Economy, Tax Evasion and Informal Labor conference (Warsaw), 16th GEP Postgraduate Conference (Nottingham), Informality and Development, conference in honor of Elinor Ostrom (Indiana), and 15th ETSG conference (Helsinki) . A supplementary online appendix is available with this article at The World Bank Economic Review website.  \n1 As Kanbur (2009) points out, informality can be described as a “conceptual incoherence” since the literature has not reached consensus regarding its definition. Loosely, informal labor refers to jobs that do not comply with taxation northe regulations that ensure protection for workers for such as paid holidays, parental leave, and retirement.  \n2 The informal sector accounts for over 50 percent in Latin America, over 58 percent in Asia, and 76 percent of total employment in Africa (ILO 2018; WB 2018) .  \n© The Author(s) 2021 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK.  \nAll rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com)  \nDownloaded from [https://academic.oup.com/wber/article/36/1/141/6406720 by LEGVP Law Library user on 08 December 2023](https://academic.oup.com/wber/article/36/1/141/6406720 by LEGVP Law Library user on 08 December 2023)  \nwith the tax collection agency, and the intensive margin refers to workers employed “off the books” in registered firms.  \nThe growing literature addressing the effect of trade liberalization on informality has treated informality as a binary decision to comply or not with tax","cbCaivyYloqCENME","https://ap.wps.com/l/cbCaivyYloqCENME","pdf",505772,1,30,"English","en",105,"# Introduction\n## Informality definitions and two margins\n## Trade liberalization and its predicted channels\n## Motivation and study contribution","[{\"question\":\"How does the paper define informality and why are two margins important?\",\"answer\":\"Informality combines employment in unregistered firms and employment in registered firms that violates labor legislation. Separating the extensive and intensive margins clarifies different worker outcomes often hidden by treating informality as a single binary concept.\"},{\"question\":\"What are the two competing mechanisms through which import competition affects informality?\",\"answer\":\"First, extensive-informal employment falls when unregistered employers shrink or exit due to low productivity. Second, intensive-informal employment rises because registered employers reduce costs by hiring informal workers.\"},{\"question\":\"Which margin drives the overall effect of trade liberalization on informality?\",\"answer\":\"The intensive margin drives the overall effect, so the net impact of trade liberalization is an increase in informality.\"}]",1784501947,76,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":85,"head_meta":87,"extra_data":89,"updated_unix":27},"unfolding-trade-effect-in-two-margins-of-informality-the-peruvian-case","",{"@graph":35,"@context":84},[36,53,67],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/unfolding-trade-effect-in-two-margins-of-informality-the-peruvian-case/113259/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":61,"encodingFormat":60,"isAccessibleForFree":62,"interactionStatistic":63},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-19",true,{"@type":64,"interactionType":65,"userInteractionCount":4},"InteractionCounter",{"@type":66},"ViewAction",{"@type":68,"mainEntity":69},"FAQPage",[70,76,80],{"name":71,"@type":72,"acceptedAnswer":73},"How does the paper define informality and why are two margins important?","Question",{"text":74,"@type":75},"Informality combines employment in unregistered firms and employment in registered firms that violates labor legislation. Separating the extensive and intensive margins clarifies different worker outcomes often hidden by treating informality as a single binary concept.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"What are the two competing mechanisms through which import competition affects informality?",{"text":79,"@type":75},"First, extensive-informal employment falls when unregistered employers shrink or exit due to low productivity. Second, intensive-informal employment rises because registered employers reduce costs by hiring informal workers.",{"name":81,"@type":72,"acceptedAnswer":82},"Which margin drives the overall effect of trade liberalization on informality?",{"text":83,"@type":75},"The intensive margin drives the overall effect, so the net impact of trade liberalization is an increase in informality.","https://schema.org",{"og:url":51,"og:type":86,"og:title":13,"og:site_name":58,"og:description":14},"article",{"robots":88,"canonical":51},"index,follow",{"doc_id":7,"site_id":24},{"code":4,"msg":5,"data":91},[92,96,100,104,109,114,119,121,126,129,133],{"id":20,"doc_module":4,"doc_module_name":45,"category_name":93,"show_sort_weight":94,"slug":95},"Story & Novel",90,"story-novel",{"id":46,"doc_module":4,"doc_module_name":45,"category_name":97,"show_sort_weight":98,"slug":99},"Literature",80,"literature",{"id":52,"doc_module":4,"doc_module_name":45,"category_name":101,"show_sort_weight":102,"slug":103},"Exam",70,"exam",{"id":105,"doc_module":4,"doc_module_name":45,"category_name":106,"show_sort_weight":107,"slug":108},5,"Comic",60,"comic",{"id":110,"doc_module":4,"doc_module_name":45,"category_name":111,"show_sort_weight":112,"slug":113},6,"Technology",50,"technology",{"id":115,"doc_module":4,"doc_module_name":45,"category_name":116,"show_sort_weight":117,"slug":118},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":45,"category_name":12,"show_sort_weight":21,"slug":120},"research-report",{"id":122,"doc_module":4,"doc_module_name":45,"category_name":123,"show_sort_weight":124,"slug":125},9,"Religion & Spirituality",20,"religion-spirituality",{"id":124,"doc_module":4,"doc_module_name":45,"category_name":127,"show_sort_weight":124,"slug":128},"World Cup","world-cup",{"id":130,"doc_module":4,"doc_module_name":45,"category_name":131,"show_sort_weight":130,"slug":132},10,"Lifestyle","lifestyle",{"id":134,"doc_module":4,"doc_module_name":45,"category_name":135,"show_sort_weight":105,"slug":136},19,"General","general"]